Many small forex bureau operators could merge following the review of the sector’s regulatory framework by the central bank.
The new framework, gazetted on February 22, is part of a move the regulator said would help enhance professionalism and improve practices in the foreign exchange sector.
Among other changes, the revised regulations require that bureaus increase the minimum operating capital from Rwf20 million to Rwf50 million, install modern equipment and Management Information Systems as well as hire staff with qualifications.
The new regulations also require them to automate their services as well as provisions allowing clients to transact through their accounts for the implementation of cashless policies.
Speaking to The New Times, last week, a number of operators in the City of Kigali said complying with the new regulations is quite expensive and could put them out of business.
The operators say that they are currently operating on slim profit margins and yet the regulations require them to incur additional costs.
Alphonse Murangwa, who manages a city forex bureau, told The New Times that they are uncertain of their future due to the cost of compliance.
Murangwa, who did not want his employer mentioned, estimated that full compliance with the new regulations, including the required capital, could cost them about Rwf40 million.
“To fully comply with the requirements, it will be quite costly, about Rwf40 million, which I am not sure the owners can raise at the moment considering how business has been going,” he said.
Staff members of forex bureaus are also worried as the new regulations could see them out of work.
The new regulations require that a manager of a forex bureau has at least a bachelor’s degree in accounting, finance, management or any other field with adequate knowledge on foreign exchange operations.
Managers without a degree should either have Advanced Level certificate of secondary education (A2) with five years of experience in forex bureau activities or a diploma (A1) with two years of experience in forex bureau activities, according to Article 23 of the new regulations.
However, a spot check by The New Times established that a majority of ‘manager’ title holders across the city fall short of the requirements.
Few have a degree in a finance-related field, while most with high school qualifications have no five-year experience.
In downtown bureau, Marie- Ann (not real name), a ‘manager’, said the qualifications requirement would put her out of work. However, she argues that despite not having five-year experience or a university degree, she has not had challenges or issues at work.
Some proprietors fear that the cost of hiring university graduates will further increase the cost of operations.
Possible ways out
Several proprietors are already considering merging their enterprises to pool together funds and resources to be able to meet the requirements.
Murangwa said that he is aware that small operators are in negotiations to pool together resources to remain in business.
The indefinite suspension of licensing of new forex bureaus announced last week, however, does not apply to instances of mergers, acquisitions, takeovers of existing forex bureaus.
This has led some industry players to conclude that the regulations are meant to reduce the number of players in the market but with bigger capacity.
©Alleastafrica and The New Times